HomeMy WebLinkAbout8.3 ImpctFeeNonResAfordHsn CITY CLERK
File #430-80
AGENDA STATEMENT
CITY COUNCTL MEETING DATE: October 21, 2003
SUBJECT:
ATTACHMENTS:
PA 01-039, Nonresidential Development Affordable Housing
Impact Fee Study and Task Force Recommendation
Report Prepared by: Eddie Peabody, Community Development
Director, and Pierce Macdonald, Associate Planner ~
Minutes Authorizing Nonresidential Development
Affordable Housing Impact Fee Study, dated February 6,
2001
Nonresidential Development Affordable Housing Task Force
Minutes
Nonresidential Development Affordable Housing Impact Fee
Study, dated October 7, 2003
Notice of Intent to Adopt a Nonresidential Development
Affordable Housing Impact Fee
RECOMMENDATION: 1.
3.
Receive Staff Report, Review the Task Force
Recommendation, and Take Public Testimony
Question Staff and the Public
Give Staff Direction on:
a. Whether a Nonresidential Development Affordable
Housing Impact Ordinance Should Be Prepared;
b. Whether a Fee Resolution Should Be Prepared; and
c. Whether Certain Categories of Projects Under City
Review Should be Exempted.
FINANCIAL STATEMENT: None at this time.
DESCRIPTION:
Background:
On February 6, 2001, the City Council adopted an Affordable 1~
included program and funding options (included as Attachment
a commercial linkage fee, also known as a nonresidential devel
After discussion of the Affordable Housing Implementation Pr(
a motion to direct Staff to undertake the study of a possible con
Housing Implementation Plan also included changes to the Dul:
ultimately increased the percentage.s of affordable units that mu
development and increased the in-lieu fee for affordable units.
C(
G:\PA~2001\01-039 Commercial Link\CCSR10-21~03.DOC
IT
lousing Implementation Program that
1). One funding option was to implement
)pment affordable housing impact fee.
~gram, as a whole, the City Council passed
~mercial linkage fee. The Affordable
lin Inclusionary Zoning Ordinance, which
st be built as part of market-rate residential
)PIES TO:
gM NO.
In-House Distribution
Task Force Members ~q~
On August 21, 2001, the City Council approved a contract with Cotton/Bridges/Associates for the
preparation of a study for a commercial linkage fee. The study was titled the Nonresidential Development
Affordable Housing Impact Fee Study (Fee Study).
On October 2, 2001, the City Council passed Resolution No.713-01 expressing the intent of the City to
adopt a development fee to mitigate the impacts of nonresidential development on the affordability of
housing in the City of Dublin. The public heating for the resolution was advertised in the Tri-Valley
Herald newspaper on September 22, 2001 (included as Attachment 4). The purpose of the resolution was
to alert developers and interested parties that applications for discretionary permits submitted after the
passing of the resolution but before the adoption of the fee could be subject to a Nonresidential
Development Affordable Housing Impact Fee.
In addition, the City Council formed a Nonresidential Affordable Housing Task Force to meet with Staff
and the City's consultants, Cotton/Bridges, to provide input related to a potential commercial linkage fee.
The Task Force was constituted of Dublin residents, businesspeople, developers, one member of the City
of Dublin City Council, and one member of the Planning Commission.
The Task Force held its first meeting on December 13, 2001. Delays in the release of detailed Census
2000 housing and income information caused the Task Force to cease working for over one year. The
delay was caused by postponements by the U.S. Census Bureau of the release of detailed City-specific
data, as well as changes in the way the U.S. Census Bureau processed requests for customized reports
needed for the Fee Study. The U.S. Census Bureau indicated that the city-specific information needed for
the Fee Study would be released in March 2003 and the Task Force reconvened on February 27, 2003. The
customized report prepared by the U.S. Census Bureau for the Fee Study was released in May of 2003.
The Task Force met on July 31, 2003 to review the preliminary findings. The Task Force reviewed the
Draft Nonresidential Development Affordable Housing Impact Fee Study (Fee Study) on September 4,
2003 and agreed to forward a recommendation to the City Council that the City Council adopt a
nonresidential development affordable housing impact fee (in Task Force minutes for September 4, 2003,
included as Attachment 2).
The Nonresidential Development Affordable Housing Impact Fee Study (Attachment 3) and the Task
Force's recommendation are presented and discussed below. Staff's analysis includes the Fee Study's
legal requirements, methodology, data sources, maximum justifiable fees, and the Task Force's
recommendation for Nonresidential Development Affordable Housing Impact Fees.
Legal Requirements for Non-Residential Development Affordable Housing Fees:
Commercial affordable housing impact fees are subject to two overlapping sets of legal requirements, both
Federal constitutional requirements and California state law requirements, codified as the Mitigation Fee
Act (AB 1600).
The Federal constitutional requirements were addressed in Commercial Builders of Northern California v.
City of Sacramento 941 F.2d 872. In that case, the Ninth Circuit Court of Appeals upheld a fee identical
to the proposed fee against a challenge that the fee viOlated the Takings Clause of the U.S. Constitution.
The Mitigation Fee Act (also known as AB 1600) requires that the City make certain findings prior to
imposing any development impact fee, such as the nonresidential development affordable housing fee
proposed by the Fee Study. The required findings are as follows:
(1) Identify the purpose of the fee.
(2) Identify the use to which the fee is to be put. If the use is financing public facilities, the
facilities shall be identified.
(3) Determine how there is a reasonable relationship between the fee's use and the type of
development project on which the fee is imposed.
(4) Determine how there is a reasonable relationship between the need for the public facility and
the type of development project on which the fee is imposed.
The Fee Study provides the support to make these findings. A full discussion of the legal requirements
can be found on pages 3 and 4 of the Fee Study (Attachment 3).
Study Methodology:
Based on a survey of recently completed commercial linkage fee studies in Northern Californian
(Oakland, Pleasanton, Livermore, Sonoma County, Menlo Park, and Mountain View), the Task Force,
Staff and Cotton/Bridges developed a five-step approach to examining the relationship between new
nonresidential development in Dublin and the demand and cost of producing affordable housing. The
methodology is summarized below.
Step 1: Determine total employees generated by~ future nonresidential development based on
employment generation rates for projected land uses in Dublin.
Step 2: Calculate the distribution of householder earnings and household income generated from
jobs/industries likely to migrate into the Th-Valley area.
Step 3: Determine the number of employees by income and earnings generated by land use
designation who would be likely to seek housing in Dublin.
Step 4: Determine the cost of producing market rate single-family residences and apartments, and'
determine the gap between that cost and what very low, low, and moderate income
households could afford to pay for such housing (known as the "affordability gap").
Step 5: Determine the maximum impact fee per square foot by multiplying employment generation
factors 'by the affordability gap for households of different income levels, and by the
contribution of the Inclusionary Zoning Ordinance housing program, and lastly, to examine
the feasibility of the impact fee(s).
Data Sources:
The Nonresidential Development Affordable Housing Impact Fee Study used a variety of data sources,
which are cited in Chapter 3 of the Fee Study, to prOvide detailed housing and income information. The
Task Force, City Staff and the City's consultants, Cotton/Bridges, analyzed data sources including but not
limited to:
· Demographic data, economic data, and housing production trends from the 1990 and 2000 Census,
including special tabulations for the Th-Valley region related to household income by industry,
household income by occupation, and the number of workers per household by income;
· Employment generation data from the City of Dublin Community Development Department, the
Institute of Transportation Engineers, and San Diego Association of Governments;
· Housing sales price trends from Dataquick Real Estate Services, rents from Real Facts, and data
from the 1990 and 2000 Census;
· Housing production cost information for apartments and single-family homes in Dublin from
developers and from the Home Builders Association of Northern California.
FINDINGS:
As detailed in Chapters 2 and 3 of the Fee Study, a strong demand for housing in Dublin, fueled in part by
strong employment growth in the Th-Valley region, has resulted in a growing gap between housing costs
and the ability of area workers to afford housing. While median housing costs increased between 55 and
120 percent from 1990 to 2000 (depending on the type of housing), the median income in Dublin
increased by 44 percent (additional detail is included in Chart 2-1 and page 2-2 of the Fee Study,
Attachment 3).
According to the calculations of the City's consultants, Cotton/Bridges, the City of Dublin has the
potential to create 31,270 additional jobs between 2003 and 2025. It is expected that a significant
percentage of these jobs will be filled by individuals living in very low-, low, and moderate-income
households. It is these households that experience the greatest difficulties in finding affordable housing in
Dublin.
A portion of the future affordable housing need will be met through the City's Inclusionary Zoning
Ordinance housing program, in which 12.5 percent of new housing units constructed in Dublin must be
affordable to very low-, low-, and moderate-income households. Of the affordable units constructed
under the City's inclusionary program, 30 percent must be affordable to very low-income households, 20
percent to low-income households, and 50 percent to moderate-income households.
Nevertheless, a significant gap will remain between the need and demand for affordable housing in Dublin
and the number of affordable housing units available to very low-, low-, and moderate-income residents.
One method of bridging that gap is to charge an affordable housing fee to nonresidential developments.
The Fee Study defines nonresidential development as office, corporate headquarters, light industrial,
research and development, commercial, retail and hotel development. Nonresidential developments create
employment that generates a need and demand for affordable housing based on the anticipated income
levels of the workforce in those developments. Revenues from the affordable housing fee would be used
to build housing in Dublin that very low-, low-, and moderate-income households can rent or own.
Staff estimates that there are approximately 10.9 million square feet of commercial development
remaining to be built, including the Transit Center Master Plan. On July 15, 2003, the City Council
approved the Fairway Ranch project, which waived any potential commercial linkage fees for commercial
development in Dublin Ranch. The fees were waived as part of the Fairway Ranch development
agreement to build affordable housing in excess oflnclusionary Zoning Ordinance requirements.
Subsequently, approximately 7.6 million square feet of commercial development could be subject to the
potential nonresidential development impact fee. All fees collected would be used to implement the City's
Affordable Housing Implementation Program (City Council minutes outlining and authorizing the
program are included as Attachment 1).
Maximum Justifiable Fee:
Based on the Fee Study methodology described above and reviewed by the members of the Task Force,
the maximum justifiable fee for the different industries projected to locate in Dublin ranges fi:om $4.70
per square foot of nonresidential floor area to $13.72 per square foot, as outlined below and in Chart 3-
12 of the Fee Study, reproduced below.
Chart 3-12, Maximum ~ustifiable Fees
Future Land Use Building Size Maximum Fee
Light h~dustrial 840 $ 5.46
Office 4,345 (- 1,301)* $13.72
Corporate HQs 862 $13.72
R&D 861 (- 861)* $ 8.81
Neighborhood Retail 235 $10.99
Commercial 3,643 (- 1,153)* $ 5.50
Hotel 122 $ 4.70
The number in parentheses represents the square footage exempted from the fee as ~>art of Fairway Ranch.
This maximum justifiable fee, however, could be modified to a rate that is comparable to non-residential
development rates of adjacent communities, so that Dublin can continue to attract new employment
generation in the future. Most cities surveyed adopted impact fees that were 9 to 34 percent of the
maximum justifiable fee (see Chart 3-10 in the Fee Study for comparable maximum justifiable fees).
The Task Force reviewed the maximum fees and determined that given the current development
environment, the City could not continue to attract new businesses and employers if the maximum fees
were implemented. The Task Force's recommendation is discussed in the section below.
Task Force Review:
After reviewing the Nonresidential Development Affordable Housing Impact Fee Study, the Task Force
agreed that there is link between job growth and demand for affordable housing. The Task Force agreed
that affordable housing is an important issue to the community.
However, the Task Force reviewed the maximum justifiable fee established by the Study and agreed that
the current development market would not support the maximum fees. Recent economic conditions have
slowed commercial development in the Th-Valley, especially in the office sector, and new fees could
further impact the viability of new commercial projects.
The Task Force reviewed the potential fee in the context of fees adopted by other jurisdictions and in the
context of comprehensive fees. All of the jurisdictions reviewed in the Study, with the exception of
Livermore, adopted an actual nonresidential fee that was 9 to 34 percent of the maximum justifiable fee
determined by their commercial linkage fee studies. Livermore adopted 100 percent of its maximum
justifiable fee which was determined to range from $.7 to $.81 per square foot. The City of Livermore's
maximum justifiable fee was reviewed by Staff and found to be an abe~ation, as Livermore's fee study
used significantly lower construction costs, reviewed only multi-family rental construction costs, and used
low factors for employment generation.
In addition, the Task Force discussed current comprehensive development fees (i.e. water, sewer, traffic,
etc.) for Livermore and Antioch, cities projected to have job growth similar to Dublin's. Comprehensive
development fees for Antioch were found to be incomparable because of the j urisdiction's reliance on
Mello-Roos taxes to mitigate impacts. Comprehensive development fees for Livermore were found to be
comparable to those of Dublin.
At its last meeting on September 4, 2003, the Task Force deliberations focused on a choice of adopting a
higher fee that would not go into effect for one year, or adopting a lower fee to take effect immediately.
The Task Force agreed on the second choice, that the City Council adopt an ordinance and cap the fee at
~ KSF symbol denotes' 1,000 square feet of floor area.
$1 per square foot of new nonresidential development due to the region's difficult econOmic conditions
(Task Force Minutes included as Attachment 2). The recommended fees are summarized in Chart 3-13,
below. Chart 3-13 reflects the projected amount of revenue expected to be generated by the proposed fee.
Chart 3-13, Recommended Fee
Future Land Use Building Size Fee Impact Fees
(KSF)
Light Industrial 840 $ .40 $ 336,000
Office 3,044 $ 1.00 $ 3,044,000
Corporate HQs 862 $ 1.00 $ 862,000
R&D 0 $ .64 $ 0
Neighborhood Retail 235 $ .80 $ 188,000
Commercial 2,490 $ .40 $ 996,000
Hotel 122 $ .34 $ 41,480
Total: 7,593 $ 5,467,480
The Task Force agreed that it was important to establish a Nonresidential Development Affordable
Housing Program, although the total impact fees that could be collected at this time would be limited to
approximately $ 5.5 million. Staff explained that the City Council reviews all impact fees on an annual
basis and may revise fees at that time.
In addition, the Task Force discussed City Council Resolution No. 713-01, which expressed the intent of
the City to adopt a Nonresidential Development Affordable Housing Impact Fee. The public hearing for
the resolution was advertised in the Tri-Valley Herald newspaper on September 22, 2001 (included as
Attachment 4) The purpose of the resolution was to alert interested parties that applications for
discretionary permits submitted after the passing of the resolution but before the adoption ofthe fee could
be subject to the fee. The Task Force recommended that the City Council consider an exemption for
projects that are currently under City Review, called "pipeline projects." The Task Force agreed that the
City Council could consider the exemption as part of their review of the proposed fee.
If pipeline projects were to be exempted, Staff would require direction as to the category of projects to be
included in the exemption. Staff feels that there are many points at which a project could be considered in
the development pipeline. These points include: pre-application submittal, formal project application
submittal, approval by the Planning Commission and/or City Council of discretionary permits, and
Building Permit application submittal. Staffwould recommend that the City Council discuss the concept
of exemptions for pipeline projects and provide Staff with that direction.
In summary, on September 4, 2003, the Task Force passed a motion to make the following
recommendations to the City Council:
1. That an ordinance be drafted and adopted for charging a Nonresidential Development Affordable
Housing Impact Fee.
2. That any potential fee at this time be capped at $1.00 per square foot of new nonresidential
development due to current difficult economic conditions and that the fee be scaled to the different
types of industries.
3. That the City Council consider exempting certain categories of projects that are currently under
review ("pipeline projects").
RECOMMENDATION:
Staff recommends that the City Council receive the Staff report, review the Task Force recommendation,
take Public testimony, question Staff and the Public.and give Staff direction on: (1) whether a
Nonresidential Development Affordable Housing Impact Ordinance should be prepared; (2) whether a Fee
Resolution should be Prepared; and if so (3) whether certain categories of projects currently under City
Review should be exempted from the potential fee.
7
AFFORDABLE HOUSING IMPLEMENTATION PROGRAM
9:£5 p.m. $.6 (430-80)
Assistant Planner Regina Adams presented the Staff Report and advised that an Affordable
Housing Implementation Plan had been prepared which consists of guidelines for
implementing specific program and funding options and which designates target groups.
The City CounCil previously chose to consider specific funding and program options over
others. The affordable housing program and funding options selected were:
Program Options
· Provide Down Payment Assistance for Inclusionary Units (silent second mortgage or
assistance with closing costs)
· Acquire and rehabilitate existing rental properties
· Subsidize new construction of multi-family housing
· Provide short-term rent subsidies via grants
Funding Options
· Continue requiring a per square foot in-lieu fee but double the amount
· Implement a commercial linkage fee
Ms. Adams discussed the Affordable Housing Implementation Plan and the funding
allocation'process. Staff recommended the following processes for allocating housing in-
lieu fee funds:
Priority 1: Acquisition-Rehabilitation. Units count toward State requirements for
permanent affordability if deed restricted for a minimum 25-year period but do not
count toward meeting ABAG's Regional Housing Needs Determination numbers.
Priority 2: New Construction of Affordable Multi-Family Units. This option assists
Dublin in meeting ABAG's Regional Housing Needs Determination numbers for creating
new affordable units.
Priority :3: Down Payment Assistance Programs. Providing down-payment assistance
exclusively will not satisfy ABAG's Regional Housing Needs Determination numbers,
unless the assistance is used in conjunction with the purchase of inclusionary units.
"' cITY COUNCIL MINUTES '
VOLUME 20
REGULAR MEETING
FebruarY 6, 200t
PAGE 56
ATTACHMENT 3-,
Priority 4: Rental Assistance Programs. Although programs under this option do not
count toward meeting ABAG's Regional Housing Needs DeterminatiOn, theY do meet State
requirements for the General Plan's Housing Element.
Ms. Adams discussed Program Strategy Recommendations:
Priority 1: Acquisition-Rehabilitation Strategy. Staff recommends that the City
inventory possible sites, send RFFs, and in general be ready to negotiate with developers,
support their applications for federal and state financing, and if necessary, provide
additional City financing.
Priority 2: New Construction of Affordable Multi-Family Units'Strategy. Staff
recommends the following strategy for new residential projects in Dublin: 1) negotiate
and Offer developers (non-profit or for-profit) of five or more units a per-unit subsidy
toward the development of inclusionary units and/or provide loans on a deferred or zero
interest basis to targeted households toward the purchase of inclusionary units; 2)
provide additional subsidies as needed to serve the target groups' income levels; and 3)
develop a system for recording a deed restriction on City-subsidized affordable units for a
minimum 130-year period.
Priority $: Down Payment Assistance Programs: Staff recommends that the City
continue to fund the Alameda County Mortgage Credit Certificate Program and initially
fund the following Down Payment Assistance Programs:
I) Community Assisted Shared Appreciation (CASA) Program
2) East Bay Delta Lease Purchase Program
$) California Housing Loan Insurance Fund (CaHLIF) Home Loan 97 & $ Program, and
postpone participation in CHFA's HELP Program and other down payment assistance
programs until the City gains experience in administering the in-lieu fee funding
process.
Priority 4: .Rental Assistance programs.' Staff recommends that, in addition to funding
Allied Housing% Scholarship Program, the City provide a grant to Echo Housing's Rental
Assistance program. After one year of participation, the City would distribute RFP's to
other agencies that provide rental assistance.
The Target Groups under consideration by .the City Council were discussed.
I) Seniors
Z) Members of Dublin's workforce
$) First-Time homebuyers
4) Low-Income renters
5) Teachers
cITy COUNCIL MINUTES
VOLUME 20
REGULAR MEETING
February 6, 2001
PAGE 57
Ms. Adams discussed the TriTValley Housing Scholarship Program (TVHSD. The City did
not apply for FY 2000-01 HOME funds, so Allied Housing is requesting that the City
contribute housing in-lieu funds to provide a rental subsidy of $6,500 for the remainder
of this Fiscal Year. This amount would cover the immediate housing needs of a Dublin
resident who is currently participating in the TVHSP Program. Allied Housing is aware
of the next HOME funding application schedule for FY Z001-02 and wil!work with the
City's Planning Staff to apply for this additional funding. Allied Housing will need a
maximum of $36,000 to assist three Dublin clients w/th housing subsidies during the
2001-02 fiscal year. However, applying for next Fiscal Year's HOME funding does not
guarantee that funds will be awarded for the TVI-ISP project. The City competes for
HOME funds with other public agencies as part of the Urban County-HOME Consortium.
In order for the TVHSP to be successful, supplemental funding for rental subsidies must
be provided so that the TVHSP can operate successfully for Dublin residents. If the City
wants to provide rental subsidies to its residents who are Iow-income students working to
become self~sufficient, a long-term funding strategy needs to be considered. The City
Council may want to consider providing a supplementary amount of in-lieu funds every
year in the event that HOME funds are severely limited or not available. This option is
explored in the City's proposed Housing Implementation Plan.
Michael Rogers, Housing Director for Resources for Community Development stated she
is new to Dublin. She thanked the Council and Staff for taking up this issue. There is a
crisis in affordable housing. They have worked successfully in over 10 communities in
the area. This is needed and will help us retain members of our community of all income
levels.
Ms. Adams distributed information from CASA. No copy was provided to the City Clerk
for inclusion in the record.
Ann Johnson Allied Housing, Hayward, made a brief presentation related to the housing
scholarship program.
Vice Mayor Lockhart asked what short term means.
Ms. Johnson stated 18 months is the maximum. The members of the' Board are from the
Alameda County Housing Authority, non-profit organizations, the Tri-Valley· Community
Mental Health Center and the Tri-Valley Haven Women's Shelter, as well as a
scholarship recipient.
CITY COUNCIL MINUTES
VOLUME 20
REGULAR MEETING
February 6, 2001
PAGE 58
Marjorie Roach, Executive Director of ECHO HouSing program passed out handouts to
the Council. No copy was provided to the City Clerk for inclusion in the record. She
talked about the rental assistance program and explained what they do to assist. The
Cities of Oakland, Hayward, Pleasanton, Fremont and Livermore currently fund this
program. She stated she was so happy that Dublin is now interested in participating in
the program.
Vice Mayor Lockhart discussed how the target groups were laid out. On Page 4 she
stated she was concerned with City personnel; she was unc6mfortable listing these people
as a group. Just list public service employees. Public and private schools - she would
prefer to just see Dublin school teachers. She did not understand the difference between
1 and 6, senior citizens. We should group all public service employees and keep them as
//3.
Ms. Adams stated Staff will go through and consistently list this for all the programs.
Vice Mayor Lockhart stated non~residents who work in our community are commuters.
Helping them live in the community solves another problem.
Mr. Ambrose asked if they wished to separate public service employees from city
employees.
Vice Mayor Lockhart suggested we leave it just Dublin work force.
Cm. McCormick discussed the figure of moderate income being $81,000.
Vice Mayor Lockhart asked about programs that permanently assist the disabled.
Ms. Adams stated the programs are limited here in the valley.
Cm. Zika discussed the requirements for satisfying the. State and ABAG's requirements.
Almost none of these satisfy ABAG's requirements. He would like to put a limited amount
of money into the down payment assistance programs.
Mayor Houston stated he felt we need to help people and not be as concerned about
fitting into the right boxes. We need to build units. He stated he did not agree with the
shared appreciation concept. Ideally we want to encourage people to build up equity in
their home and then they can buy another home and we get our unit backl He asked
how we will be able to let owners know units may be available for rehab because there is
not that many in town.
CITY COUNCIL MINUTES
VOLUME 20
REGULAR MEETING
· February 6, 2001
PAGE 59
Ms. Adams stated we could keep this in a database and share this with developers.
Mr. Ambrose stated the strategy explained is fairly proactive.
Mayor Houston commented that on the rental assistance program with the limited
amount of money, Once it is spent, it is spent. If we just pay in this program, these
monies cannot be reclaimed in the future, the way some of the programs work. We have
another item to derive money from our CDBG program and it makes sense to use this.
Cm. McCormick stated she wanted to make sure we are not eliminating any target group
that just needs rental assistance for a limited time.
Mr. Ambrose stated the CDBG funds do not cover the entire Allied Housing costs for
rental subsidies. We will apply this coming year for home funds. Unfortunately, we are
not an entitlement City when it comes to CDBG funds. You need to have a minimum
population of 50,000. Pleasanton and Livermore get 7 or 8 times the amount of funding
that Dublin receives.
Vice Mayor Lockhart commented on the letter just received from the Home Builders
Association regarding doubling fees and asked if we have to prove reason for doubling
the fees.
Ms. Adams stated' we need to justify why we need to increase the fees.
Ms. Silver stated the in-lieu fee is a zoning ordinance requirement and provides an
option of paying a fee in lieu of providing units. The fee is well below what it would cost
to build an affordable unit. It can be increased. It is not the same kind of fee as a
commercial linkage fee. This is a fee that developers can opt to pay.
Cm. Oravetz stated on the commercial side we need to have the study to prove we need
the fee.
Phil Serna with Homebuilders Association stated he authored the letter. He stated he was
glad that Staff took the time to clarify the Nexus Study. The second portion of the letter
talked about general misconceptions of fees. He gave example'of a 2,000 square foot
home. He applauded the City's efforts to address this crucial matter. Dublin is doing a
better job of providing housing opportunities than other cities.. One of the solutions he
encouraged may be the new state financial programs working their way through the
legislature. He stated he thought Torlakson is carrying the bill. Don't increase the fee
100%, but look'at another funding alternative from the state that we will be eligible to
apply for.
CITY COUNCIL MINUTES
VOLUME ~.0
REGULAR MEETING
February 6, 2001
PAGE 60
Cm. Zika commented that the fee is the' same as what neighboring cities charge.
Mr. Serna stated we need to justify why we are doing this, not just because this is what
neighboring cities do.'
Karen Zeigler, 872 Herman Avenue, Livermore stated she is a housing scholarship
· recipient with the City of Livermore. Without programs like Allied Housing she would
not have a place to live. The working force poor group is growing every year. More and
more people are working 2 and $ jobs and still can't afford to pay the rent. It is
commendable that Dublin is finally lOOking at this issue. Churches in the area are
lOOking at affordable housing.
Bruce Fiedler stated he is administrator of Pleasanton.Gardens. He displayed files for
affordable senior housing. They recently opened applications for 8 hours. Most of the
applicants are not low income persons. The larger number of applicants is SZ,000 to
$4,000 less than extremely low income. The units w/Il have to be very dense and
relatively small. This kind of housing has to be close and it can be a part of our
downtown. HUD is building around 600 square foot units today. In Fleasanton, the
units are 400 and 540 sq ff. This is better than bad housing in bad neighborhoods or the
back seat of a car.
Mark Breazeal stated it is important to get these new companies coming in to pay a living
wage; this will help out. He stated he has experience in economics and was concerned
about the healthcare industry. When he was running for the Board of Supervisors this
came up quite a lot. We have a healthcare crisis going on here. He' suggested that the
City put in emergency healthcare personnel and consider emergency medical personnel
above fire fighters. We need more of that kind of personnel here in the valley.
Cm. Zika stated he felt the City Council misunderstood what was going on last year.
They didn't allocate any rent subsidization. We paid $10,000 for administration, but
didn't help anybody.
Mr. Ambrose clarified that administration is really case management and it helps get
participants ready so they can become eligible for this program.
Cm. Oravetz talked about in-lieu fee versus commercial linkage fee.
Ms. Silver stated even doubling the fee is still less than it costs t° build the units.
Cm. Oravetz stated he views the commercial linkage fee as a tax. They w/Il pass this on
to the consumers. He stated he will oppose the commercial linkage fee, but he is
supportive of the in-lieu fee.
CITY COUNCIL MINUTES
VOLUME 20
REGULAR MEETING
February 6, 2001
PAGE 61
Cm. Zika stated he will support both. The commercial linkage fee is a one time charge.
This fee witl help us get some affordable housing. Once the commercial buildings are
built, you can't get them again. If we decide we don't have enough, it will be too late.
Years ago, Dublin residents were told that developing east Dublin would not cost existing
residents money.
Vice Mayor Lockhart stated it is'expensive to come to Dublin and locate a business, but
this doesn't seem to be slowing them down. This helps their workers to live in the
community. It will be the responsibility of businesses as they share in the economy, they
also share in the impacts.
Cm. McCormick stated she supports 'both fees and all 4 priorities because it is good for
our community. We need all income levels here and diversity.
Mayor Houston stated he felt we are not raising the fees to chase some of our other
communities. We will raise so much more than Pleasanton because we have more of a
base to puli from. If you really want affordability, everyone can't live in a 2,000 square
foot house. We have to look at building smaller and differently. He stated he liked Mr.
Fiedler's Comments about building units in neighborhoods. Adding fees is adding to the
misery. He is in favor of the priorities and using the money we have now. By adding
fees, we're making it worse. It bothers him that rent subsidy only benefits a very limited
number of people. He is not in favor of the commercial fee nor of doubling the in~lieu
fee. We should be more creative in our building in the downtown to take advantage of
transportation and building smaller units. He thanked Staff for pulling the ideas
together.
Cm. Oravetz stated he is supportive of the down payment assistance program.
On motion of Cm. Zika, seconded by Cm. McCormick, and by unanimous vote, the
Council with all 4 priorities and with revisions to the target groups as discussed, adopted
RESOLUTION NO. 18 - 01
ADOPTING THE
AFFORDABLE HOUSING IMPLEMENTATION PROGRAM
On motion of Cm. McCormick, seconded by Cm. Zika, ~ind by' majority vote, the Council
directed Staff to undertake a Nexus Study for the Commercial Linkage Fee. Mayor
Houston and Cm. Oravetz voted against the motion.
On motion of Mayor Houston, seconded by Cm. McCormick, and by unanimous vote, the
Council agreed to allocate $0,500 of in-lieu fees to fund the rental subsidy portion of
Allied. Housing, Inc., Th-Valley Housing Scholarship Program for FY 2000-01.
CITY COUNCIL MINuTEs ....
VOLUME Z0
REGULAR MEETING
February 6, 2001
PAGE 62
On motion of Cm. Zika, seconded by Cm. McCormick, and by majority vote, the Council
directed Staff to return with a revised Inclusionary Zoning Ordinance and a Resolution
for doubling the in-lieu fees. Mayor Houston voted against the motion.
On motion of Cm. Zika, seconded by Cm. McCormick, and by unanimous vote, the
Council directed that Staff return with specific guidelines and procedures that will
incorporate the strategies and funding allocation methods mentioned in the Affordable
Housing Implementation Plan for acquisition-rehabilitation, assistance in constructing
new affordable multi~family units, down-payment assistance, and rental assistance
prOgrams.
OTHER BUSINESS
11:49 p.m.
Mr. Ambrose advised that the SPCA will hold a groundbreaking on February 15th. He
stated he will distribute the invitations.
Ms. Silver reported on the PUC hearing for the Th-Valley electrical upgrade. We can
provide effective information by intervening. We will submit motion to' intervene and
letter to protest. The date of the hearing will most likely be on February 20t~ from 1:30
p.m. to 5:00 p.m. in the afternoon in San Francisco.
Mayor Houston will speak on behalf of the City.
Cm. McCormick stated we had a really fine art workshop and thanked Ms. Lowart and
her Staff. She thanked her colleagues for attending. It was good for Dublin.
Cm. Zika stated he also had a good time at 'the workshop. They did an excellent job and
as soon as we get about $140 million we can implement the program.
Cm. Oravetz commented he also had a good time at the program.
Vice Mayor Lockhart stated she thought the workshop was great. It was fun having Staff
members there and Mr. Peabody and Mr. Foss provided enjoyable input. Mary Eversley,
Principal of DHS also attended and participated. It was very valuable having her there,
CITY COUNCIL MINUTES
VOLUME 20
REGULAR MEETING
February 6, 2001
· PAGE 63
COMMERCIAL LINKAGE FEE
MEETING MINUTES
September 4, 2003
3:00 - 5:00 p.m.
Present:
Janet Lockhart, City of Dublin Mayor
Pat Cashman, Alameda County Surplus Property Authority
Don Johnson, Imprint Works and the Dublin Chamber of Commerce
Michael Parker, Koll Development Corporation
Adib Nassar, City of Dublin Planning Commissioner
City Staff:
Eddie Peabody, City of Dublin Community Development Director
Chris Foss, City of Dublin Economic Development Director
Pierce Macdonald, City of Dublin Associate Planner
Renuka Dhadwal, City of Dublin Recording Secretary
Absent:
Brad Kaune, Resident
(Mr. Kaune had contacted City Staff prior to the meeting to state that he
resigned from the Task Force)
Mr. Peabody called the meeting to order at 3:00 p.m. He explained that after
the previous meeting on July 31, 2003, Staff incorporated the changes to the
Study and further information in response to Task ForCe comments. Mr.
Peabody also stated that by the end of the meeting, the Task Force should be
able to provide a recommendation to the City Council. Ms. Macdonald reviewed
the changes to the Study and other information with the TaskForce. The
changes to the report and further information are summarized as follows:
Employee Generation Figures
Commuting Patterns and Jobs-Housing Balance
Effect of the Contributions of the Dublin Inclusionary Housing
Program on Provision of Employee Housing and Dublin's Housing
Needs
Comprehensive Fees Comparison
Mr. Cashman asked if Staff took into account the percentage of Dublin
employees that are presumed to live in Dublin. Ms. Macdonald said that Staff
did take that fact into consideration. She explained that the revised Page 12 of
the report is based on the assumptions that 48% of new employees in Dublin
will want to live in Dublin, as this was determined to be true for the Tri-Valley
area in the Th-Valley Planning Committee's report.
ATTACHMENT
Furthermore, Ms. Macdonald and Mr. Peabody explained to the Task Force that
the City's Specific Plan requires a housing ratio of 1:1 (one residential unit per
employee in Dublin) and therefore Staff is trying to balance that goal with those
employees who would be commuting to Dublin for their jobs.
Ms. Macdonald and Mr. Peabody discussed with the Task Force members the
affordable housing requirement through the Inclusionary Housing Ordinance.
They explained that the Ordinance requires 12.5% of any new residential
development to be affordable. In response to a suggestion from the Task Force
from the previous meeting, Staff distributed the affordable housing requirement
between the inclusionary and the potential commercial linkage fee and
presented the number of units projected to be built under the Inclusionary
Housing program. The Inclusionary program could create housing for
approximately half of the workers determined to need housing by the Study. Mr.
Peabody summarized the discussion to say that with the current Inclusionary
Housing program the City will only make a dent in the per share allocation from
ABAG. ABAG's regional housing needs assessment is based on anticipated
population increases in the Bay Area. The growing cities take a good chunk of
housing in the area. Trying to bring a housing balance between inclusionary
requirement and commercial linkage requirement is a good way to close the
gap, but it would still leave a big gap between the regional demand for
affordable housing and what the City can sUpply.
Comprehensive impact fees comparison. Two hypothetical projects were
submitted for fee estimates in Dublin and in jurisdictions projected to have job
growth similar to Dublin. Antioch has Mello-Roos taxes over and above the
development fees. Their overall impact fees were very low. Livermore and
Pleasanton have comparable comprehensive fees, particularly for traffic and
water. Dublin is still developing as a city.
Notification of intent to adopt fees. The City advertised in 2001 the City's intent
to adopt a new fee. The City Attorney advised Staff that if the City is
considering an increase in fees, Staff could publish as a notice in the
newspaper, that a fee may be adopted in the future. The premise is that if a
City is adopting a fee, the project could be subject to that particular fee. It is
fairly important consideration.
City Staff presented three different fee scenarios, including a maximum
justifiable fee, a fee comparable to the actual adopted fees of other jurisdictions,
and a fee that was set at a low cost and uniform across the different industries.
Fees projected to be collected totaled approximately 5.5 million dollars for the
lower fee scenarios. Staff noted that the City Council may decide to do
something different than any of the fee scenarios.
The Task Force discussed the effect different fees could have on development in
the City and land values. Some Task Force members felt that the fee would
come out of the value of the commercially-zoned land. Currently, it is not worth
the price of development to build on land with Office land use designations, so
the land value is lOw.
The Task Force discussed different methods of levying the fee and decided that
the fee should be paid by the type of development at time of building permit and
that the fees should reflect the different impacts that the different industries
have on affordable housing.
The Task Force discussed issues of parity between different kinds of
development in the City.
Task ForCe members agreed that the maximum justifiable fee could reflect the
reduction identified as a certain percentage of housing being provided by the
Inclusionary program.
Task Force agreed that the ordinance was reasonable and that the Study
satisfied the requirement to perform a nexus study.
Next the Task Force discussed fees. Staff explained that the fee could be set at
one level and increased as linked with the Consumer Price Index.
The Task Force discussed projects currently under review by the City. Task
Force members discussed the fairness of charging additional fees to projects
under review, which have already requested fee estimates from the City.
The Task Force discussed the option of adopting a higher fee and holding the
fee in abeyance for one year as an incentive to stimulate development .during
the next year. The Task Force discussed a second option of adopting a lower fee
due to current economic conditions. Staff discussed the ability of the City to
evaluate fees and change fees in the future. Some Task FOrce members felt that
relative to the land value issue, the fee should be as low as possible. Some
Task Force members felt that the fee should be based on the specific
characteristics of the prospective businesses. The Task Force agreed that the
program should be streamlined and easy to administer.
On a general consensus~ the Task Force recommended that the City
Council institute a l~lonresidential Development Affordable Housing Impact
Fee Ordinance. The members also recommended that the fee be capped at
$1 due to the current economy. The fee should be scaled down from $1 for
Office to the industries with lower impacts. In addition, the Task Force
recommended that the City Council consider exempting the projects that
are in the pipeline and under City Review.
Staff committed to send the Task Force the revised document with corrections,
the actual recommendation, and to set the item for the October 7, 2003 City
Council meeting. The Staff will report what the committee has determined and
recommend that the Council direct Staff regarding preparing the ordinance or
not. Staff explained that this would not be a Planning Commission item,
because it is not a zoning ordinance amendment.
COMMERCIAL LINKAGE FEE
MEETING MINUTES
July 31, 2003
3:00- 5:00 p.m.
Present:
Janet Lockhart, City of Dublin Mayor
Pat Cashman, Alameda County Surplus Property Authority
Don Johnson, Imprint Works and the Chamber of Commerce
Michael Parker, Koll Development Corporation
Eddie Peabody, City of Dublin Community Development Director
Chris Foss, City of Dublin Economic Development Director
Pierce Macdonald, City of Dublin Associate Planner
Renuka Dhadwal, City of Dublin Recording Secretary.
Absent:
Adib Nassar, City of Dublin Planning Commissioner
Brad Kaune, Resident
Community Development Director Peabody began the meeting by briefly
outlining the purpose of the Nonresidential Development Affordable Housing
Impact Fee Study (the Study), which began a year and a half ago. He described
that due to lack of statistical information available, the Study was delayed. He
updated the Task Force members that the City, since then, has received
statistical information from the Census Bureau regarding jobs, housing and
employment, which provides the basis to charge a linkage fee for commercial
projects. The Nexus Study that the Task Force recommends to Council should
answer questions such as:
1. What is the purpose of the fee?
2. HOw is the City going to use it?
3. What is the relationship between the fees used and the type of
development project in which the fees were imposed?
4. Identify a reasonable relationship between the need for fee and the type
of development project in which it is imposed.
Ms. Macdonald gave a presentation about the methodology used for calculating
the commercial fees based on the data received from the Census. She indicated
that the sources Used for this Study were the projected industries that would be
located in Dublin, projected jobs that these industries would create, the income
ranges for the employees, and the housing costs for the employees. Ms.
Macdonald informed the members that for this purpose Staff used many sources
including the income data provided by ABAG and the Census, which provided a
special tabulation for the Tri-Valley region from Census 2000. Staff also used an
inventory of available sites for non-residential development and the type of
industry anticipated for each site. Ms. Macdonald stated that Staff compared
Dublin's Study with neighboring cities (Pleasanton, Livermore, Oakland, Sonoma
County, Menlo Park, and Mountain View) that have a linkage fees. She
summarized the findings as follows:
1. Affordable housing units are not keeping pace with job growth.
2. Dublin's inclusionary program will contribute to closing the housing
"affordability gap".
3. An affordable housing impact fee on nonresidential development is another
way to close the gap.
4. The maximum justifiable fee can be modified to a rate comparable with
rates of adjacent communities.
Ms. Macdonald narrated a slide presentation showing the statistics used for
preparing the Study. Itemized below is the summary of the issues discussed in
the presentation.
o
o
o
o
10.
Legale rationale and AB 1600
Dublin employment/housing trends and changes in Dublin from 1990
to 2000, including large increases in housing costs
Jobs and households and the increase in number of jobs per household
"Jobs-housing link" which describes the number of future employees
who will live or want to live in Dublin
Different median incomes of industries in the Tri-Valley
Household income for some of the jobs in the different industries, fall
into low, very low and moderate income ranges
Study calculates the factor of employees per 1,000 square feet falling in
the very low, low and moderate income ranges
Housing affordability and construction costs, including affordability
calculation for apartment and single-family projects
"Maximum Justifiable Fee" is the product of the housing gap and
number of low, very low and moderate income employees per industry
Comparable cities charging a commercial linkage fee
There was a discussion on the affordability calculation for apartment projects.
Mike Parker and Pat Cashman agreed with the Study regarding the breakeven
rents. Mr. Cashman had concerns about the data presented regarding Jobs-
Housing Link slide and commuting pattern statistic of 48%. Mr. Cashman felt
that it was over-stated. The TaSk Force discussed the benefit of a jobs-housing
balance.
To conclude staff presentation, Ms. Macdonald presented the formula for
calculating a maximum justifiable fee. This can be done by taking the housing
cost affordability gap and multiplying it by the employment generation number
of different industries. At this time Staff was not presenting a fee to the Task
Force, but was merely giving the formula for arriving at a fee. She also
presented the fee being charged by some of the comparable cities such as
Oakland, Mountain View, Menlo Park, Sonoma County, Livermore and
Pleasanton.
Mr. Parker wanted to know if Staff studied this in context with total fees for all
impacts: Mr. Peabody responded that it would be done, but the current
emphasis is addressing the affordable housing situation. The main focus is to
arrive at a reasonable fee that would be presented to the Council for approval.
Mayor Lockhart wanted to know if this Study took into account the inclusionary
fee being charged for residential development. Mr. Peabody responded that Staff
would bring information regarding the effect of the residential inclusionary
program on the demand for affordable housing for commercial development.
Mr. Peabody stated that the fees charged by other cities are subjective and not
related to commercial developments maximum justifiable fee. Ms. Macdonald
referred to chart 4-2 which gave the range of adopted fees as ranging from 9% to
34% of the maximum justifiable fee as calculated by the comparison cities. She
explained that task force can consider exempting certain industries from paying
the fee. She also indicated that some of the cities that charge a low development
fee have a consumer price index linked to the fee, so that if housing costs
increase then the City can increase the nonresidential development affordable
housing impact fee.
Mr. Peabody explained the next step in the process. He stated that Staff would
like to incorporate the suggestions of the Task Force into the Study and bring it
back for their review and make a specific recommendation to the City Council
based on the Task Force recommendation. Mayor Lockhart asked questions
regarding the timing of Council review of the fee study and review of commercial
projects. Mr. Peabody responded it would be part of Council's decision.
Mr. Cashman summarized his concerns as itemized below: 1. City needs to be realistic and not overstate the goal.
2. City must bear in mind the residential inclusionary fees while setting
up a goal.
3. City should also compare its fee structure with the surrounding cities.
The next meeting was scheduled for September 4, 2003.
MEETING MINUTES
FOR THE
NON-RESIDENTIAL AFFORDABLE
HOUSING TASK FORCE
February 27, 2003
C~ATJJ TO ORDER
A special meeting of the City of Dublin Non-Residential Affordable Housing Task Force was held
on Thursday, February 27, 2003 in the Dublin Civic Center Regional Meeting Room, 100 Civic
Plaza, Dublin.
Mr. Eddie Peabody Jr., Community Development Director, called the meeting to order at 3:15 p.m.
ATTENDEES
Eddie Peabody Jr., Community Development Director; Janet Lockhart, Mayor; Chris Foss,
Economic Development Director; Adib Nassar, Planning Commissioner; Don Johnson, Chamber
of Commerce; Pat Cashman, Alameda County Surplus Property Authority; Jeff Goldman,
Cotton/Bridges Consultant; and Autumn McGrath, Recording Secretary.
Mr. Peabody pointed out that about two years ago the committee began to look at an issue referred
to as a Non-residential Impact Fee, in addidon to the hard work towards an Inclusionary ordinance,
dealing with residential development. There was a relationship between the provision of new jobs in
the community and the necessity for providing housing, particularly affordable housing. The
process was started, but came to a stand still, Significant changes had taken place in Dublin's
community and employment between 1990 and 2000, due to the building of major new employment
centers, particularly in eastern Dublin. It was very difficult to get accurate information that would
represent what had happened to Dublin over this 10-year period. The conclusion was reached that
the most accurate information would be received from the 2000 Census, which was late in coming.
However, the committee does have some helpful information coming at this point, and therefore is
working on moving forward. Mr. Peabody turned the flobr over to Mr. Goldman to recap the
methodology, the progress to this point, and the work remaining to be finished on this project.
Mr. Goldman stated that the first premise was that there is a relationship between land use that
creates jobs and a need for housing. The exact nature of that relationship depended upon the kinds
of jobs created, the number and density of those jobs, the wage levels, and other arcane
demographic characteristics of the community, such as how many people tend to work in each
household, etc.
The second premise xvas that in order to determine whether there is a need to have non-residential
development contribute to the affordable housing solution, the Task Force had to understand not
only the number of jobs, types, and income levels of these jobs, but also the household
characteristics of the workers likely to fill these jobs, and therefore what kind of housing they might
like or need, the cost to build that hOusing, and finally whether there's a gap between the cost to
build that housing and the amount that these workers can afford to pay for that housing. The
G:\H0using\C0mmercial Linkage Fee Task Force~Vlinutes
bottom line is that if there is a gap then some methodology must be used to determine xvhether a fee
should be charged to these employers to contribute to filling that gap.
One of the things that caused a halt in progress was the lack of up-to-date information available
from the Census Bureau. It takes the Census Bureau 2.5 years from the time they send out the
forms to the time they fully released the detailed information. The most detailed reports which the
committee needed to help support this study and methodology, were not released for California
until September of last year. This detailed release allowed for cross tabulations. Items such as the
following would be compared: income levels by different' types of jobs, number of workers per
household by different types of jobs, and the relationship between household characteristics and
types of jobs, in the Dublin area. The cross tabulations of Occupation Industry by Income and
Household are not statistics that are available in pre-published reports, nor will the Census Bureau
allow people to run their own cross tabulation queries. A special run by the Census Bureau must be
requested. Mr. Goldman requested this detailed report in late January, followed by a few weeks of
working on parameters. The Census believed that they would be able to provide the cross
tabulations by March.
Mr. Goldman also discussed similar development markets as Dublin for comparing the density of
jobs that can be expected in new commercial development. A reasonable calculation of the housing
demand that xvill be generated by non-residential growth would be based on the number of jobs per
acre of commercial land development. Different land uses would change the number and types of
jobs/employees.
Mayor Lock_hart asked if there would be any information included in the statistics being gathered of
the age of workers in the different categories?
Mr. Goldman answered that age was not specifically worked into the cross tabulation, but it was
indirectly included in the comparison of household characteristics including the following types:
non-family younger households without children, family households with children,, and possibly
older households without children. Mr. Goldman will get back to Mayor Lockhart on further Senior
issues, such as how many fit into which categories. There may be a couple of pre-formatted tables
released from the Census Bureau that would include some of this age-specific information.
Mr. Goldman replied to another question, stating that Cotton/Bridges had worked with the City
Staff to reach an agreement on what information was deemed most relevant. The Hypothesis was
that different occupations and different income levels would have different average numbers of
workers per household, and significant differences in household characteristics, such as family v.
non-family. If this hypothesis was true, these differences would be taken into consideration when
creating the methodology.
Mr. Cashman asked whether this cross tabulation would show the number of Dublin residents
presently working in Dublin, and those Dublin employees who live elsewhere.
Mr. Goldman answered that some connection could be made between people who work and live in
Dublin using the Census data. And even for those who live in Dublin and work elsewhere, the
relationships discussed earlier between type of job, income, household characteristics, and type of
housing remain the same.
G:\Housing\Commercial Linkage Fee Task ForceXNiinutes ; 2
Mr. Goldman then addressed Mr. Cashman's next question stating that Dublin was not being ,
viewed as a closed system, but that information for the entire Tri-Valley area would be considered.
Mr. Goldman then returned to the revised sdhedule. The new tentative schedule was the following:
the Census information would be received by mid-March; the City Council would be given a short
report in April, showing the direction of progress; and the Task Force would meet again in May,
giving a final report and fee recommendation to the City Council in June.
Mr. Goldman pointed out that the end result of a recommended fee was not expected to fzll the
entire gap between the cost of housing, and the xvorkers income. The fee was meant more as an
amount that was considered to be a reasonable contribution on the part of major employers, taking
into account other resources that are available to the City. This range of resources included State
and Federal subsidy programs available to affordable housing developers, and regulatory and other
incentives that the City could provide to make housing less costly.
Mr. Goldman addressed questions raised regarding the end result of the Non-residential
Development Affordable Housing Study. The ultimate result would be a recommended fee, which
would be a starting point for the City Council discussion. Whatever resulted from that discussion
may be very different from the starting point in the f~rst draft. .
Mr. Goldman pointed out a handout included with the meeting materials, which was a report by
U.C. Berkeley, dated May 2001. The authors attempted to survey how many were planning on
moving to, or staying in Dublin, and get a sense of the kind of jobs and income levels that would be
created. They did not get a high response from the firms of their query, but from those that did
respond, the authors believed that the types of jobs that would be created would be mostly higher-
paid, professional-level jobs in financial services, communications, and technological industries.
Mr. Cashman pointed out that the number of high-paying jobs anticipated had not materialized, and
had been replaced with secondary jobs, such as retail. About 2000 professional office jobs have
been replaced by probably 1000 retail jobs, and thus lower income than anticipated.
Mr. Goldman pointed out that the further out the studies go, the less reliable they are, because
things could always turn around in a few years.
Mr. Goldman stated that the forthcoming Census information would show the number of people in
certain income levels that live in Dublin. Furthermore, Mr. Goldman said that, based on the
Housing Element, the City knows that there is a greater need for lower to moderate income housing.
Mr. Peabody pointed out that one of the study requirements was a legal basis and justification for a
non-residential development affordable housing fee (AB1600 Nexus). Like a Traffic or or other
impact fee, this one also needed to have a sound nexus for establishing a fee. A fee cannot be
arbitrarily established without first going through this nexus process.
Mr. Goldman furthered this point by stating that the fee that most communities ultimately adopt
tended to be significantly lower than what would come directly from the AB 1600. The fees tended
to be a lot lower than the maximum justifiable fee because the realities of the competitive market
must be considered.
G:~-lousing\Commercial Linkage Fee Task F0rceXMinutes
In response to Mr. Foss's question regarding adjacent cities, Mr. Goldman pointed out that
Liverm0re had a Community Linkage Fee. Mr. Goldman stated that he would report at the next
meeting on Livermore's and Pleasanton's current fees. He stressed that the non-residential
affordable housing fee did not apply to existing businesses. It was a growth fee applicable ro new
businesses to help provide housing.
Mr. Peabody summed up the schedule of upcoming tasks and meetings, based on the expected
release of Census special cross tabulations.
The meeting was adjourned at 3:40 p.m.
G:\Housing\Commercial Linkage Fee Task ForceWlinute,. 4
Meeting minutes for the December 13, 2001 Task Force meeting are not available. Due to
the time lapse between the first meeting on December 13, 2001 and the second meeting
on February 27, 2003, Staff and the City's consultants, Cottm~Bridges re-introduced the
Fee Study methodology, data sources and other information to the Task Force on
February 27, 2003. The agenda for the December 13th meeting is provided for reference.
City of Dublin
Non Residential/Commercial Linkage
Task Force
December :/3, 200:/* 3:00 P.M.
Regional Meeting Room
Introduction
Introduction
Purpose of Study
Committee Issues of Concern
AGENDA
Overview of Study Methodology
- Industry Forecast
Employer Survey
Housing IVlarket Analysis
3. 'Key Assumptions in Model
- Estimating Wages
- Estimating Housing Needs
- Other Issues
Key Policy l:ssues to Address
- Subsidizing Gaps
~ Exemptions
- Other Issues
5. Next Ste ps
City of Dublin Nonresidential Development Affordable
Housing Impact Fee Study
October 21, 2003
City of Dublin
Nonresidential Impact Fee
Final Report
PA 01-039
ATTACHIV',ENT 5
Introduction
This chapter provides an introduction to the Nonresidential Development Affordable
Housing Impact Fee Study, including the purpose of the study, the methodology of the
study, and data sources used to generate the analysis.
A. Introduction
The State of California, Bay Area, and Tri-Valley
region have experienced unprecedented economic
growth during the latter half of the 1990s.
Concurrent with this economic growth, the region
continues to have a significant demand for new
housing. Because the supply of housing has not
kept pace with the demand for housing created by
new jobs, single-family home prices and apartment
rents have increased dramatically, making housing
less affordable to Iow and moderate income
households.
In 2000, the Dublin City Council recognized that affordable housing would continue to be
an important issue in Dublin. In February 2001, the City of Dublin adopted an Affordable
Housing Implementation Plan which ultimately resulted in an Inclusionary Housing
Program that requires developers to set aside 12.5% of all new residential development
as affordable to very Iow, Iow, and moderate income households. In the Affordable
Housing Implementation Plan, the City Council also expressed a desire to examine the
relationship between job growth and housing, as the second important factor of
affordable housing demand. The City of Dublin retained Cotton/Bridges/Associates
(CBA) to perform an analysis of the impact of job growth on the affordability of housing
and to recommend an impact fee program to mitigate this impact.
The analysis reviews the types of industries projected to locate in Dublin, the number of
employees those industries will attract (reduced for commuting patterns), and the
income ranges those employees would receive as salaries, wages and other income. In
addition, the analysis reviews the cost of constructing housing in the Tri-Valley area, as it
relates to the number of employees whose household incomes fall within the very Iow,
Iow and moderate-income ranges. The analysis determines the price of closing the gap
between what employees can afford to pay for housing and what new construction costs,
and the analysis links that price to the size of the business' facility, as an impact fee.
CBA began work on the Nonresidential Development Affordable Housing Impact Fee
Study (Fee Study) in August 2001. Soon thereafter, it became clear that current data on
household income, employment, and industries in the Tri-Valley area was limited.
Although the U.S. Census 2000 was gradually being released, detailed cross tabulations
needed for the analysis were not readily forthcoming. Moreover, alternative data
City of Dublin
Nonresidential Impact Fee
Final Report
sources also proved to be less than satisfactory for the study. 'Therefore, the Fee Study
was suspended in June 2002 until U.S. Census data became available.
In late 2002, the Census Bureau indicated that staff was available to perform the
detailed cross tabulations necessary for the Nonresidential Development Affordable
Housing Impact Fee Study. CBA requested the appropriate cross tabulations from the
U.S. Census BUreau, which were provided in May 2003. The report findings herein
provide the results of the analysis.
B. Legal Requirements
in recent years, as municipalities have struggled to address their residents' needs for
affordable housing, cities have imposed fees on proposed nonresidential developments
to help finance the production of affordable housing for the employees that the
nonresidential development attracts. The U.S. Court of Appeals, Ninth Circuit, upheld
one such fee against a Constitutional challenge in its decision, Commercial Builders of
Northern California v. City of Sacramento (941 F2d 872). In short, the Appellate Court
upheld a fee on nonresidential development to offset burdens created by such
development, based on a housing impacts study.
Commercial impact fees are subject to two overlapping sets of legal requirements. The
Federal constitutional requirements of "nexus" and "rough proportionality" set forth under
No#an v. Califomia Coastal Commission (1987) 483 U.S.825 and Dolan v. City of Tigard
(1994) 512 U.S.374 are generally inapplicable to fees imposed on a legislative basis on
all similarly situated development. (See Ehrilich v. City of Culver City (1996) 12 Cal.4th
854; City of Monterey v. Del Monte Dunes (1999) 5267 U.S. 687.) California's
"reasonable relationship" requirements are set forth in California case law and codified in
sections 66000-66010 of the California Government Code, which the Legislature
adopted in 1987 (known alternatively as the Mitigation Fee Act or AB 1600). Although
distinct, these two standards are substantively similar and the California Supreme Court,
in Ehrlich v. City of Culver City (1996) 12 Cal.4th, concluded that the two standards in the
context of legislatively enacted and generally applicable development fees for all
practical purposes have merged.
The Mitigation Fee Act also requires that the City adopt certain findings prior to imposing
a development impact fee, such as the nonresidential development affordable housing
fee proposed by this study. The required findings are as follows:
(1) Identify the purpose of the fee.
(2) Identify the use to which the fee is to be put. If the use is financing
public facilities, the facilities shall be identified.
(3) Determine how there is a reasonable relationship between the fee's
use and the type of development project on which the fee is imposed.
(4) Determine how there is a reasonable relationship between the need
for the public facility and the type of development project on which the
fee is imposed.
City of Dublin
Nonresidential Impact Fee
Final Report
The Fee Study provides support for these required findings. The Sacramento decision
affords considerable deference to local agencies to develop a reasonable methodology
for establishing the nexus between commercial development and affordable housing and
the appropriate fee amount. The courts do not require mathematical precision in
developing a commercial impact fee, provided that the fee meets the requirements of the
Mitigation Fee Act. The fee upheld in the Sacramento case met the reasonable
relationship standard by demonstrating that non-residential development has an impact
on the affordability of housing, by (a) creating new Iow-income jobs in the City, which (b)
create additional demand for Iow-income housing. The amount of the fee upheld in
Sacramento was based on the difference between the incomes of such Iow-income
workers available for housing expenses and the cost to produce housing to house them.
A portion of this deficit was imposed on non-Commercial development as the fee.
Therefore, if a local jurisdiction follows the aforementioned principles in developing a
commercial impact fee, the courts generally have upheld the fees as justifiable.
To develop the fee structure, the Task Force, City Staff and CBA examined five
commercial impact fee models used by surrounding jurisdictions. These included the
cities of Oakland, Livermore, Pleasanton, Menlo Park, Mountain View, and Sonoma
County. The cities of Danville, Hayward, San Ramon, San Leandro, and Union City and
counties of Alameda and Contra Costa were not examined because these jurisdictions
do not have impact fees for nonresidential development. CBA examined the
assumptions and data sources used by each jurisdiction and then developed a hybrid
approach tailored for the City of Dublin. Chapter 3 provides the methodology used to
meet the aforementioned legal requirements.
C. Methodology
Based on the survey, the Task Force, City Staff and CBA developed a five-step
approach to examining the nexus between new nonresidential development in Dublin
and the demand and cost of producing affordable housing. The methodology is
summarized below.
Step 1:
Step 2:
Step 3:
Step 4:
Determine total employees generated by future
nonresidential development based on employment
generation rates for projected land uses in Dublin.
Calculate the distribution of household income
generated from jobs/industries likely to migrate
into the Tri-Valley area.
Determine the number of employees by income
generated by land use designation who would be
likely to seek housing in Dublin.
Determine the cost of producing market rate
single-family residences and apartments and the
gap between that cost and what very Iow, Iow, and
moderate income households could afford to pay
for such housing (known as the "affordability gap").
City of Dublin
Nonresidential Impact Fee
Final Report
Step 5:
D. Data Sources
Determine the maximum impact fee per square
foot by multiplying employment generation factors
by the affordability gap for households of different
income levels and by the contribution of the
Inclusionary Zoning Ordinance housing program,
and, lastly, examine the feasibility of the impact
fee(s).
Data for the Nonresidential Development Affordable Housing Impact Fee Study is drawn
from a vadety of sources, which are cited in Chapter 3. These data sources are as
follows:
· Employment, population, and households growth projections from the
Association of Bay Area Governments (ABAG Projections Series);
"' Demographic data, economic data, and housing production trends from the 1990
and 2000 Census, including special tabulations for the Tri-Valley region related
to 'household income by industry, number of people in occupations by industry
groups, household income by occupation, and number of workers per household
by income, and other detailed information;
· Inventory of available sites for residential and nonresidential development as well
as the type of industry or project anticipated for each site based on an analysis
by the City of Dublin Community Development Department;
· Employment generation data from the City. of Dublin Community Development
Department, the Institute of Transportation Engineers, Trip Generation Manual
(1997), and San Diego Association of Governments Trip Generator Study;
· Comparable commercial impact fee studies from the City of Oakland,
Pleasanton, Livermore, Sonoma County, Menlo Park, and Mountain View;
· Housing sales price trends from Dataquick Real Estate Services, and apartment
rents from Real Facts, the 1990 and 2000 Census, and other city survey data;
· Housing production cost information for apartments and single-family homes in
Dublin from developers and from the Home Builders Association of Northern
California.
E. Commiffee Review
To develop the commercial impact fee, the City Council appointed a six-member task
force to oversee the development of the nexus study and commercial impact fee
analysis. The City Council and Planning Commission each had one member in
attendance. Developers and the local business community were also represented.
Members were as follows:
· Don Johnson, Imprint Works, for the Dublin Chamber of Commerce
[] Adib Nassar, the Dublin Planning Commission
· Janet Lockhart, Mayor of Dublin
· Brad Kaune, Home Marketing Alternative Project Services
[] Pat Cashman, Alameda County Surplus Property Authority
· Michael Parker, Koll Development Corporation
City of Dublin
'Nonresidential Impact Fee
Final Report
The Task Force met on four occasions, December 13, 2001, February 27, 2003, July 31,
2003, and September 4, 2003. The first two meetings focused on an introduction to the
key economic and housing issues facing Dublin over the next decade, as well as a
discussion of the methodology to be used to calculate the nexus study. At the July 31,
2003 meeting, the Fee Study preliminary findings were distributed to the Task Force for
comment. City Staff returned at the last meeting on September 4, 2003, with further
information in response to the Task Force's comments. Based on the information
provided and the Task Force discussion, the Task Force passed a motion expressing
the Task Force's recommendation to the Dublin City Council.
F. Findings Summary
As detailed in Chapters 2 and 3, a strong demand for housing in Dublin, fueled in part by
strong employment growth in the Tri-Valley region, has resulted in a growing gap
between housing costs and the ability of area workers to afford housing. While median
housing costs increased between 55 and 120 percent from 1990 to 2000 (depending on
the type of housing), the median inCome in Dublin increased by 44 percent (see chart 2-
I and discussion on p.2-2 for additional detail).
Dublin has the potential to create 31,270 additional jobs between 2003 and 2025. A
significant percentage of these jobs will be filled by individuals living in very Iow-, Iow,
and moderate-income households. It is these households that experience the greatest
difficulties in finding affordable housing in Dublin.
A portion of the future affordable housing need will be met through the City's inclusionary
housing program, in which 12.5 percent of new housing units constructed in Dublin must
be affordable to very Iow-, Iow-, and moderate-income households. Of the affordable
units constructed under the City's inclusionary program, 30 percent must be affordable
to very Iow-income households, 20 percent to Iow-income households, and 50 percent to
moderate-income households.
Nevertheless, a significant gap will remain between the need and demand for affordable
housing in Dublin and the number of affordable housing units available to very Iow-, Iow-,
and moderate-income residents. One method of bridging that gap is to charge an
affordable housing fee to nonresidential developments. Nonresidential developments
create employment that generates a need and demand for affordable housing based on
the anticipated income levels of the workforce in those developments. Revenues from
the affordable housing fee would be used to build housing in Dublin that very Iow-, Iow-,
and moderate-income households can rent or own.
This maximum justifiable fee, however, could be modified to a rate that is comparable to
non-residential development rates of adjacent communities, so that Dublin can continue
to attract new employment generation in the future (see Chart 3-10 for comparable
rates). Recent economic conditions have slowed commercial development in the Tri-
Valley and any potential fee could be reviewed for its effect on the viability of commercial
projects.
At the September 4, 2003 meeting, the Nonresidential Development Affordable Housing
Impact Fee Task Force made the following recommendations: that the City Council
City of Dublin
Nonresidential Impact Fee
Final Report
adopt a Nonresidential Development Affordable Housing Impact Fee Ordinance; that
due to current economic conditions, the City Council adopt a fee resolution capped at $1
per square foot of new nonresidential development floor area, which is scaled to the
impacts of different industries; and that the City Council consider exempting projects
which are currently under City review.
City of Dublin
Nonresidential Impact Fee
Final Report
Employment/Housing
Trends
This chapter provides a general background and history of the Tri-Valley area, and then
focuses on economic and housing market changes in Dublin.
A. Tri-Valley Planning Area
The City of Dublin is situated in the Tri-Valley
area, an area encompassing more than 350
square miles in the Diablo, San Ramon, and
Livermore/Amador valleys. The Tri-Valley
includes the cities of Danville, Dublin, Livermore,
Pleasanton, and San Ramon, and the
surrounding parts of Alameda and Contra,Costa
counties.
~'~.xfalley Arec~
'3~ City of Dublin
Over the past fifty years, cities in the Tri-Valley
area have developed in a consistent pattern.
Each has shown similar demographics, housing
markets, and economic conditions.
Understanding the changes and transition of the
Tri-Valley area are therefore important in that these changes will likely occur in Dublin as
well.
Until the 1950s, the Tri-Valley area was primarily agricultural in nature. Pleasanton and
Livermore incorporated in the 19th century, providing services for the local agricultural
economy. However, the establishment of the Lawrence Livermore Laboratory and other
major research facilities dudng the 1950s began a new direction that would shape the
future character of the Tri-Vailey. The completion of the freeway systems in the 1960s
and 1970s (Interstates 580 and 680) opened the area to extensive single4amily
suburban development in unincorporated areas.
With the rapid suburbanization of the Td-Valley area, the cities of Dublin in Alameda
County and Danville and San Ramon in Contra Costa County incorporated in the early
1980s. These cities also included large tracts of land within their spheres of influence.
During the 1980s, the Tri-Valley area became a major center of employment for the
region, with the development of the Bishop Ranch Office Park in San Ramon and the
Hacienda Business Park in Pleasanton. Employment development accelerated through
much of the 1990s.
citY ........................................... of Dublin Final R~P~rt
Nonresidential Impact Fee 8
B. Dublin Market Trends
Dublin experienced substantial
population and employment growth
during the 1990s. ABAG's
Projections 2003 show that the City
of Dublin experienced a 70%
increase in job growth from 1990
through 2000 (Chart 2-'1 )~.
However, according to the U.S.
Census Bureau, the City
experienced a 41% increase in
housing units and a 29% increase in
population dudng the same period of
time2. As a result, the jobs-housing
ratio in Dublin significantly increased
since 1990 from 1.84 jobs per
housing unit in 1990 to 2.2 jobs per
housing unit by 20003.
Dublin's rapid growth and demand
for housing is evident in the changes
housing prices over the decade as well.
Chart 2-2 details housing price trends
from 1990 to 2000. According to
Dataquick, the median sales price of a
condominium rose 55% to $291,0004.
Meanwhile, the median sales price of a
single-family home increased 120% to
more than $450,0005. Although long-
term trends on apartment rents are not
available, the Census Bureau reports
that the median contract rent for
apartments and single-family
residences has increased by
approximately 54% to $1,245 in 20006.
80%
Chart 2-1
Population, Job, and Housing Growth
City of Dublin, 1990-2000
~%
~%
~%
~%
~%
10%
0%
in
70%
29%
Population Job Growth Housing
Chad 2-2
Housing Price Increases
600/0 .... 55%
40%
20%
0%
20%
Condominium Single-family Contract Rent
Home
According to ABAG's Projections 2003, the total number of jobs in Dublin in 2000 was 21,870. The 1990
figures from ABAG's Projections 2002 totals 12,870 jobs.
U.S. Census Bureau figures for housing total 9,872 units in 2000 and 6,992 units in 1990. Population
totals 29,973 people in 2000 and 23,229 people in 2000.
2000 U.S. Census
Condo median starting pdce of $187,500 in 1990
Single-family home median starting price of $210,000 in 1990
Median contract rent starting price of $811 in 1990
City of Dublin Final Report
Nonresidential Impact Fee 9
In contrast, the 1990 and 2000 Census reports that the median household income of
Dublin residents increased 44%, considerably slower than housing prices~. Changes in
household income are largely affected by two conditions:
1) The pace of net migration and turnover among households. For example, new
households moving to Dublin tend to have higher incomes, on average, than
existing residents, including those moving out of the community. The rate at
which higher income households replace lower-income households will affect the
pace of income growth in a community.
2) The rate of increase of incomes, among existing residents. Most workers
experience significant gains in income as they progress in their careers, and
average incomes rise with age, at least through retirement. The rate of income
growth in a community will also be affected by the percentage of workers who
stay in a community through their peak earning years (typically ages 45 to 54).
According to the City of Dublin Community Development Department projections, Dublin
is expected to continue its rapid pace of development through 2025. Dublin's
employment is expected to increase 160% from 19,500 jobs in 2002 to 50,770 jobs in
2025. Other indicators, such as Association of Bay Area Governments (ABAG), also
point towards rapid development. According to ABAG projections for Dublin for the
period of 2000 to 2025, Dublin's population is projected to increase 120% to 65,900
persons, and households are expected to increase 138% to 22,220 (Projections 2003).
These changes will significantly increase the demand for suitable housing.
These growth projections have long-term implications for the City of Dublin. Lower-
income residents often live in subsidized units and have limited choices to move
elsewhere. This creates a condition where upper income households who have homes
or lower-income persons who have subsidized units remain in the City. However,
moderate income families and the workforce of the City, including teachers, public safety
workers, nurses, and others leave the community entirely, or find affordable housing
elsewhere and commute to work in Dublin. This trend affects traffic and commuting
patterns, impacts quality of life, and makes it difficult for employers to attract and retain
employees~.
~ Median income for Dublin residents was $53,710 in 1990 and $77,283 in 2000, according to the U.S.
Census Bureau.
~ Section 4.6.3 of the Eastern Dublin Specific Plan discusses the advantages of a jobs/housing balance
(page 30).
~:ity o~ Dublin Final Report
Nonresidential Impact Fee 10
Jobs-Housing D.emand /
This chapter analyzes projected employment growth and evaluates the impact of this
growth on the need for affordable housing. This analysis is intended to demonstrate the
nexus between employment growth and the demand for housing, and calculate the
maximum justifiable fee that could be charged for affordable housing.
A. Employment Growth
Population growth in Dublin is attributable, in
part, to nonresidential development. As available
land is gradually developed with commercial and
industrial businesses, new job opportunities are
created. New jobs will attract a workforce, many
of whom may wish to live in Dublin if suitable
housing is available. The first step in determining
the demand for housing is therefore to estimate
the number of new jobs generated from
nonresidential development in Dublin. The
calculations are illustrated to the dght and in
Charts 3-t and 3-2 on the following page.
Employment
Available Acreage
x
Industry Employee Generation
Rate
X
Commuting Rates
Employees to live in Dublin
To that end, City Staff provided an inventory of developable nonresidential land in Dublin.
For each, City Staff determined the type of use (e.g., commercial, industrial, school,
parkland, etc.) expected to occupy each site and tdp generation rates. Using recognized
data sources, the project consultants, CBA, calculated the total amount of developable
acreage and the number of jobs generated from different types of commercial,
manufacturing, industrial, retail, and other uses. Taken together, Dublin can expect to
accommodate 32,808 additional jobs by build-out (projected to be 2025).
Regardless of employment projections, not all employees will choose to live in Dublin.
Households choose a community for a vadety of reasons, including quality of schools,
availability of affordable housing, proximity to family and relatives, public service levels, etc.
According to a 1990 study by the Td-Valley Planning Committee2, an association of planning
directors and other public agency officials in the Td-Valley area, only 48% of all employees
will eventually -choose to live within the Tri-Valley area. This factor was applied to projected
employment to estimate the demand for housing in Dublin:
The employment generation rates and the projected employment generation totals are
shown in Charts 3-1 and 3-2, The total projected building floor, area is approximately
10.9 million square feet.
2 Working Paper #.3, Td-Valley Planning Committee, ABAG 1990 Census Transportation Package
(According to ABAG, the Tri-Valley Planning Committee was formed out of the TH-Valley Transportation
Council with a one-time grant from ABAG to produce a subregional planning strategy.)
city ...........
of Dublin
Nonresidential Impact Fee
..... ............... ' ........ Final Rep_nrt
11
Chart 3-t Employment Generation Rates
EmpI0¥men, t, Generation Rates
ITE Average Adj. Rate for
Future Land Uses in Industrial Density Commuters
Dublin ,, CodeI per, KSFz per KSF3
Light Indus~al ' ' 11'0 "' ' 1.69 0.81
office 710 3.85 1.85
Corporate Headquarters 714 3.85 1.85
Research and Development 760 2.47 1.19
Neighborhoo, d Retail 814 2.04 0.99
CommerciaF 820 1.96 0.94
Hotels 310 0.47 0.23
Notations
1. ITE Codes provided by Dublin Staff; employment densities from ITE, 1997
2. Eastern Dublin Specific Plan, surve¥~ information, and Institute of Transportation
Engineers, Trip Generation Manual, 5"' Edition, 1997
3. Employment density adjusted for average 52% commute factor for Td~Valley (Tri-
Valley Planning Committee)
4. Commercial employment rate from Eastern Dublin Specific Plan
5. Hotel rate of .47 per KSF adjusted for a 240-room hotel at 508 square feet per room
(based on survey of Monarch Hotel, Amerisuites and Holiday Inn Extended Stay)
6. School employment rate from SANDAG Traffic Generator Study
7. Government rate of 1.5 based on survey of proposed Alameda County Courthouse
Chart 3-2 Employment Generation Totals From 2003 to Build Out
Employment GeneratiOn,TOtals ,, ~i
Employees
Future Land USes in Building New
to Live in
Dublin Size (KSF)1 Employees2 Dublin3
'Light Indusiri~l ' 840 .... 1,420 680
Office (includes Transit Ctr.) 4,345 16,728 8,038
Corporate Headquarters 862 3,319 1,595
Research and Development 861 2,127 1,025
Retail (includes Transit Ctr.) 235 479 233
Commercial 3,643 7,140 3,424
Hotel 122 57 28
Total .................. , ,i0,908 "' 31,270, ...... , 15,023 ' ' ....
Notations
1. City of Dublin provided building size capacity by different land uses
2. Total employment determined by calculating employment generation rate by building size
3. Employees expected to live in Dublin determined by adjusting employment generation for average
52% commuting factor for Tri-Valley (Tri-Valley Planning Committee).
City of Dublin
Nonresidential Impact Fee 12
Final' R~pC~r~'"
B. Job-Related Earnings and Income
Having calculated the additional jobs created by projected non-residential development,
the question that arises is: How does one determine the wages and salaries of
anticipated future jobs? To that end, the U.S. Census Bureau provided specialized cross
tabulations of earnings of householders working in the TH-Valley area (2000 Census).
Since many households have more than one worker, the Census Bureau also provided
information in its cross-tabulations on the income of ali members of the household,
called "Household Income."
As shown in Chart 3-3, the Task Force, City Staff and the project consultants, CBA, first
calculated the median earnings of householders employed in various industries, as well
as the income of the entire household of that employee. Household income is a broad
measure of all monetary gains reported by a household. Many households have more
than one worker and sources of income in addition to earnings, which increases their
ability to pay more for housing. For this reason, household income is used as the basis
of the nonresidential development impact fee. Industry categories were collapsed into
broader categories in order to match the types of industries likely to occupy the particular
general plan land use designations in Dublin.
Chart 3-3: Median Earnings and Income by Industry, Census 2000
Median ' ' Median Median
Class Industry Householder Householder Household
Earnings Earnings Income
,, (Averaged)
1....'.,' .. Man,uf~c. tud.ng ....... '"' $ 77,216 '.i"' $77.,..216.......... $107,320 .....
2 Construction $61,213
Transport., Warehouse, and Utility $58,904
..... Wholesale Trade .......... $6.4.,759 .... $62,.44.0' . .$9t,416 .....
3 Retail Trade $49,923 $49,923 $85,072
4 ..... '~' "t~f0rmation $71,618
Finance and Insurance $67,609
Real Estate, Rental and Leasing $57,846
Professional, Scientific, and Tech. $76,116
.Admini.strative Support ......... $42,571 $69,801 ..... $99,96,0. . .
5 Educational Services $48,824
Healthc~a. r~..and Social. A.s~sistance ..... $.49,1 ! 2 ..... $48,984 .... $?9,703 .....
'6 .... Arts, Entertainment, and Rec. $31,737
Accommodations and Food $29,468
Other Services $41,609 $35,482 $65,427
7 .. p~bliC Administrati0n $65,343 $65,343 $95,957
C~'°fDublin ' ............................................... Final Rep0rt
Nonresidentia! !mpect Fee !3
Chart 3-4 summarizes the household incomes by householder industry distributed to
very Iow, Iow and moderate income groups. For example, using the chart below, one can
calculate that out of 100 employees or jobs within the Education/Social Services industry
in the Tri-Valley, ten employees or jobs could be expected to be within the Iow-income
range set by the State's Department of Housing and Community Development (HCD)~.
Chart 3-4: Tri-Valley Household Income By Industry Distribution
Household Income
very Low- Low-Income Moderate-
IndustrY Income Income
.Manufacturi'ng. '.'.'.i ' ..4:5% ..... 6.5% "'. '..". ...... 21:6%.'"'..'.".' '.."
Other Industrial 3.8% 4.4% 15.5%
Retail Trade 8.5% 9.8% 21.2%
Professional 5.7% 6.2% 17.1%
Edu~ation/s°Cial ..... 7.8% "10.1% ' 25.4%'
Arts/El~tertai'nment ' i8.2'% ....... 14.30/o ..... 2;I.7% ' '
Public Administration 3.7% 4'.6% 16.6% .....
soume: U.S. Census, 2000 adjusted for income thresholds developed by HCD.
C. Employment Generation by Land Use
Section A calculated the total number of
jobs expected to be generated in Dublin
from nonresidential, development. Section
B then calculated the expected distribution
of household income of a householder
working in each industry. This section
determines the employment densities, by
income, associated with each land use.
The calculations for this step are illustrated
in the sidebar to the right.
Based on the developable land remaining
in Dublin, the Study estimated the
distribution of industries likely to occupy a
Employees Per Land Use
Adjusted Employee Generation Rate
x
Square footage of each land use
(weighted for different industries)
x
Income Distribution Profile (weighted for
different industries)
Number of very Iow, Iow, and moderate
income employees per land use
particular site based on Specific Plan land use designations and the North American
Industry Classification System (NAICS) also used by the U,S. Census Bureau. For
example, on commercial-designated sites, the City estimated that the site would contain
60 percent retail industry uses, 26 percent leisure (arts, entertainment and food uses),
and 14 percent information uses (professional and administrative offices). This mix of
uses was forecasted using the Waterford commercial center as the model, because it is
a recent commercial project in the Eastern Dublin Specific Plan area.
~ The California Department of Housing and Community Development (HCD) determines income ranges for
Alameda County based on the median household income, adjusted for household size. Very Iow income
means 50% or less of the County's median income. Low income means more tftan 50% to 80% of the
median income. Moderate means more than 80% to 120% of the median income.
City of Dublin Final Report
Nonresidential Impact Fee 14
..,,art 3-5. Employment Generation Per Land Use
Specific Plan Land .Uses bY percentage
Light Office Corp. Res & Retail Comm. Hotel/ Semi
Industry Mix !ndustr. Hdqtr Dev Arts/ Public
Goods 100% 0% 0% 0% 0% '0% 0% 0%
.ManUfacturing. 0% 0% 0% 0% 0% 0% 0% ..... 0%
Retail 0% 0% 0°/O 0% 100% 600/0 0% 0%
Professional ' ' 0% 1000/o" 100% 100°/o' '~ 0.% .... 14% ' 0.% "'0%"
Education/Social 0% 0% 0% 0% 0% 0% 0% 100%
Arts/Entertain 0% 0% 0% 0% 0% 26% 100% 0%
Having estimated the mix of industries on each land use, it is possible to determine the
number of future employees by household income that can be expected to work and live
in Dublin. The Study developed by CBA multiplied the employee generation rate
(adjusted for commuting) by the amount of developable land to yield the total number of
employees per land use. This total was then multiplied by the distribution of household
income generated by householders working in those industries. This calculation yielded
the number of employees by household incOme, generated per 1,000 square feet of floor
area. Chart 3-6 provides a summary of the calculations.
Chart 3.6: Employment Generation Per Land Use
Number of EmploYees.. Per 1,000 Square Feet
Very Low Income Low Income Moderate-
Land Uses Income
Light..!..ndustriaI .., 0:.04 °*0.5.' ..... 0-17 .......
Office 0.11 0.12 0.32
Co?orate Headquarters 0.11 0.12 0132
0.07 0.07 0.20
Research/Development ..............
Retail 0.08 0.10 "' 0.21'
Commercial 0.42 0.48 0.09
Arts/Entertain 0.04 0.03 0.05
Note: Figures refer to employees per 1,000 square feet of floor area.
D. Housing Prices and Affordability Gap
Having determined the number jobholders bY industry and income projected to locate in
Dublin, the focus turns to the housing market. This section develops the average cost of
producing market rate housing in Dublin and contrasts that with the amount that can be
afforded by very iow, Iow and moderate income households (the "affordability gap").
The City of Dublin's consultants, CBA, developed an apartment proforma based on three
recent projects built in Dublin between 2001 and 2003 for the analysis. In addition, the
Study used the single-family home proforma (essentially a small-lot condominium)
City .............................. of Dublin Fir;'al ReP;3rt
Nonresidential Impact Fee 15
developed by the Homebuilders Association for the City's inclusionary program in 2001.
Chart 3-7 provides a summary of the cost of producing affordable rental projects and the
market prices of a condominium development in Dublin.
Chart 3-7: Housing Proformas in Dublin
, Housing Projects ,
Project Specifics Apartments .... FOr Sale
Average Density ....... 40. units/acre . ]'2 'Units/.ac~e ....
Construct!On .TyPe ...... TyPe V:.Wo0d ..... Wood...F.r.ame ........
Stories 3 and 4 1 story
'Pa*rkin'g .............p~dium/Gr0Und Fio°r Attached Garage
J ~11~111 Ill III III I lr IIIII r_.~ II I i .~? I llll IIII ~1 I II I II
Land Costs $22 240 per unit
,,soft,Costs , ...... $57, ,506 per Unit 45% of sales price , , ,
Construction Costs $~06,055 per,unit .... $80 pe'r'squam' ~oot
Averag~ COSt,. ", ..... ~185,800 cost per'un!t,'$282,000 (price) ,
Notes:
1, Based on average of three proforrnas of apartment projeCts built in Dublin (2001-2003), average
unit size of 793 square feet.
2, Data provided by HorneBuilder Association for the City's inclusionary program (2001), unit size of
1,200 square feet.
The Task Force determined the breakeven rent and sales price for these projects using
residential industry standards for financing, operating costs, and vacancies based on
information provided by CBA and Task Force members' knowledge and expertise. The
Study calculated the maximum amount that could be afforded by households of different
income levels. The difference (called the "affordability gap) was annualized and
discounted using a 7 percent capitalization rate, which is the market interest rate for
permanent loans. This calculation provides the lump sum amount necessary to
compensate a property owner for renting at below market rents.
Calculating the "affordability gap" for single-family residences was more straightforward.
The maximum affordable payment for moderate-income households was calculated
based on standard assumptions regarding annual property taxes and insurance, a 5
percent down payment, and a 30-year fixed loan at a 7 percent interest rate. The
difference between the sales price and maximum affordable price represented the lump
sum amount necessary to compensate a property owner.
It should be noted that the sales price of a single-family home used in the above analysis
($282,000) is substantially below the market rate price for single-family residences being
built in Dublin today. The difference could be due to the small lot size for the unit (3,500
square feet) as well as the higher densities allowed. Still, even with those qualifications,
the $282,000 price used for the inclusionary analysis is probably more reflective of the
sales price of condominiums. Chart 3-8 summarizes the results of the affordability gap
analysis.
City o1=Du' ~iiIn ..........................
Nonresidential Impact Fee !8
' Fin;al'. Re'l~t'
Chart 3-8: Affordability Gap Analysis
Affordability Apartment Project Single-family Residence (COndO),
Calculation Very Low Low Moderate Very Low Low Moderate
Annual HH Income~ $ 32,200 $4.8 45.0 .... $77,300 "' $35,.800 $5~,2.80 ....$85,920
Max. Affordable Rentz
/ Price3 $730 $1,136 $1,858 $81,166 $166,129 $279,414
Breakeven
Rent/Sales4 $1,668 $1,668 $t,668 $282,000 $282,000 $282,000
'"Afford'ability G'ap/Unit'~$9'~8 $.53~2 '$'(!.89) ...'$200,8~4 '. $1..~5,87'~I ...... $ 2,.686.".'.,,
Annualized
Affordability Gap. $11,259 $6,384 $(2,271) N/A. I.. NIA N/A
Lump Sum t0 .....................
Compensate Property $160,838 $91,t95 $(32,448) $200,834 $t15,871 $ 2,586
0wner~ ......................................... I ..............
Notes:
1. Annual Income determined by HCD income limits.
2.
3.
4.
For apartments, a three-person household was
assumed; a four-person household was assumed for a single-family residence (three-bedroom size).
Maximum affordable rent refers to payments of no more than 30% of income toward housing after utility
payments.
Maximum affordable sales price assumes a 5% down payment, 30 year loan at 7% interest rate and
standard assumptions regarding property taxes and insurance.
Breakeven rent was determined by calculating the likely financing costs of a 100% financed loan for 30
years at an interest rate of 7%. The Institute of Real Estate Management provided standard
assumptions for calculating the operating costs of apartment projects. For single-family residences, the
breakeven price was assumed to be the sales price.
Difference between the breakeven rent for an apartment unit or home sales price and the maximum that
could be afforded by a very Iow, Iow, and moderate income household.
The lump sum payment needed to compensate the property owner fo? renting or selling a unit at below
market rates is determined by a 7% capitalization'rate.
E. Maximum Justifiable Fee
The final step was to determine the
maximum justifiable commercial impact
fee, and the fee's feasibility. To
maximize the utility of the fee, the fee
was based on very Iow and Iow-income
households living in apartments and
moderate, income households living in
small lot single-family homes. The fee
calculation methodology is represented
in the sidebar to the right.
City Staff and CBA also surveyed one
dozen jurisdictions to compare their
maximum justifiable fees with the results
of the analysis. From this pool, three
jurisdictions were selected from Alameda
County (Pleasanton, Livermore, and
Oakland) and three were outside the
Maximum Justifiable
Commercial Impact Fee
Step A: Employment Generation Rate
for Each Industry Adjusted for
Commuting
x
Step B: Income Distribution of
Householder employed by Industry
x
Step C: Weighted Employment
Generation Rate by income for different
Land Uses
x
Step D: Affordability Gap for Apartments
and Condominiums
City of Dublin
Nonresidential Impact Fee
Final Report
County (Sonoma County, Menlo Park, and Mountain View). The adjacent cities of
Danville, Hayward, San Ramon, San Leandro, Union City and counties of Alameda and
Contra Costa were not selected because these jurisdictions do not have housing impact
fees for nonresidential development.
Dublin's fee methodology is comparable to the latter four studies, conducted after 2000.
Fees for the first two, Livermore's study (DMG, 2001) and Pleasanton (EPS, 1990
updated in 2000), were the lowest. The Livermore study derived the lowest fees,
primarily due to significantly lower construction costs estimated at approximately
$77,000 for a multi-family apartment unit and low proportions of very Iow and Iow-income
jobs. Chart 3.10 shows the comparable jurisdictions with maximum non-residential
affordable housing impact fees, below.
Chart 3-10: Maximum Justifiable Fee (Per Square Feet)
Industries 3akland Mountain Menlo Park Sonoma Livermore Pleasanton
View C0un ,ty
Light' ' . $i2.85'" 16197" $24.72 $20 $.07-$.26 $4.58
Industrial
Office ....$35'.'1'I ....... 16.97 '45".~2 ........... $31 $.52 '$1'3'.62 .........
,Corp:'H,Q,,,' ,' ,, ",, ',' ,"~ ',$2',4.'7,2', ...... ,' $;5~' ", 'i ....... .", ", ',
R and D 16.97 45.32 $4 $5.37
Retail $32.39 14.84 $24.72 $36 $.81 $6.26
Commercial $24.72
Public/Semi $24.72 $31
-Public
In most cases, except for the City of Livermore, the cities surveyed did not adopt the
maximum fees established in their studies, but opted instead to adopt fees that were on
average 9 to 34 percent of the maximum justifiable fee. For example, the City of
Pleasanton recently adopted an impact fee of $2.28 per square foot for new commercial
development. The City of Livermore adopted the maximum fee, which was calculated as
totaling between $0.7 and $.81 per square foot.
CitYo f DUblin ....... :: ................... ' .... Final RepOrt
Non_residen_tia! Impact Fee !8
F. Dublin's Maximum Justifiable Fee
The City of Dublin's maximum justifiable fee is calculated in a manner similar to the
jurisdictions above. In addition, the Task Force recommended that the contributions of
the City's lnclusionary Zoning Ordinance in meeting the City's housings needs, including
workforce housing, be considered when calculating the maximum justifiable fee.
The Fee Study recognizes that the maximum justifiable fee by industry could be adjusted
for the percentage of very Iow-, tow- and moderate-income housing units anticipated to
be produced under Dublin's inclusionary housing program. The inclusionary program
requires that 12.5 percent of all new units produced be affordable to Iow- and moderate-
income households, of which 30 percent should be affordable to very Iow-income
households, 20 percent to low-income households, and 50 percent to moderate-income
households.
The number of units affordable to very low, low and moderate income level residents,
expected to be produced under the lnclusionary Zoning Ordinance is approximately
1,260 units3. These units could house 2,772 employed residents within the City of Dublin
or approximately 52 percent of the very Iow, Iow and moderate income jobholders
projected to be employed by businesses locating in Dublin, The City of Dublin's housing
needs and the contribution of the Inclusionary Zoning Ordinance are described in Chart
3-11 below.
Chart 3-11, Contribution of Inclusionary Program to Housing Employed Residents
Remaining 12.5% Number of Employed State of
Units inclusionary Workers at 2.2 Residents within California
to Build by Year Requirement per Unit Very Low, Low Regional
2025 and Moderate Housing Needs
Income Ranges Assessment
To Year 20254 (1999 - 2006)
1.0;084, .' ..... '.'.'. ;i = r 1,260. Units 2,772 ........... 5,303 .. .' ... '5',436'.'', ........
The Study recommends that by reducing the maximum justifiable fee by the percentage
of affordable housing that will be created by the City's Inclusionary Program, the non-
residential development fee program would not duplicate the Inclusionary Zoning
Ordinance's contribution to providing affordable housing to jobholders. Using this
formula, the maximum justifiable fees to provide affordable housing to jobholder
residents, as a direct result of commercial development in Dublin, are as follows (Chart
3-12):
3 Affordable Housing Pdority Areas map approved May 7, 2002 by City Council Resolution 57-02, totals
10,084 units remaining to be built in Dublin. lnclusionary requirement of 12.5% produces 1,260.5 units.
4 Employed Residents are the percentage of workers who would desire to move to Dublin at 48%. Average
of Very Low, Low and Moderate Income workers is approximately 35.3% of total employed residents.
city of Dublin Final Report
Nonresidential Impact Fee 19
Chart 3-12, Maximum Justifiable Fees
Future Land Use Building Size Fee
(KSFs) .
Light!ndustrial ...'... ' .840 ..... $ 5.46 .
Office.. ..... . 4,345.('-.1,.30!.)* ....$. 13..72 .....
Co,rp0rate HQs .. 862 $13.72 ........
R&D ..... 861. (, .861)~' $ 8.8! ..........
Neighborhood Retail ..... 235 ~ $10.99 . .
Commer, c!,a! ....... 3,643 (- 1~1.53)*'. .... $. 5.5,0 .....
Hotel 122 $ 4.70
* The number in parentheses represents the square footage exempted from the fee
as part of Fairway Ranch project.
G. Task Force Recommendation
At the September 4, 2003 meeting, the Nonresidential Development Affordable Housing
Impact Fee Task Force made the following recommendations: that the City Council
adopt a Nonresidential Development Affordable Housing Impact Fee Ordinance; that,
due to current market conditions, the City Council adopt a fee resolution capped at $1
per square foot of new nonresidential floor area, which is scaled to the impacts of
different industries; and that the City Council consider exempting projects which are
currently under City review.
The Task Force approved a motion to make the following recommendations to the City
Council:
1 .) That an ordinance be adopted for charging a commercial linkage fee.
2,) That, due to current market conditions, a fee be capped at $1.00 per square foot
of new nonresidential floor area and that it be scaled to the impacts of different
industries.
3.) That the City Council consider exempting certain categories of projects that are
currently in the pipeline and under City review.
As recommended, the adopted fees would range from $.34 to $1.00 per square foot of
commercial development based on the type of commercial use or business tenant, as
outlined in Chart 3-t 3, below. The fee would be collected prior to issuance of a building
permit. The fee would be levied one time, with the construction of new commercial floor
area.
5 KSF symbolizes 1,000 square feet of floor area.
Cit~/of ........................Dublin
Nonresidential Impact Fee 20
Final Report
Chart 3-13, Recommended Fee
FutUre Land Use Building Size Fee7 Impact Fees
(KSF)s
.Light Industrial ....... 840 ..... $ .40 ..... $. 336,000
Office 3,044 $. 1..00. $ 3,0~.4,000
COrporate HQs ........ 862 ........... $ 1.00 $ 862 000
R&D' .. 0 .... $....64 ..... $... 0
Ue!ghbor'hood' Retail 235 $...80 $. 188,00.0 ".i,'
Commercial 2,490 ........... $ ...40 ............. $, ..... 996,000
Hotel 122 $ .34 .$ ..... 4.!,4.80 ........
Toial ' ' ' .7',593 ........ . '"... '.'." $ 5,467,480
The City estimates that there is approximately 10.9 million square feet of commercial
development remaining to be built, including the Transit Center Master Plan and the
Dublin Ranch commercial development. Due to the terms of some development
agreements, approximately 7.6 million square feet of commercial development would be
subject to the potential nonresidential development fees.
H. Conclusion
A strong demand for housing in Dublin, fueled in part by strong employment growth in
the Tri-¥alley region, has resulted in a growing gap between housing costs and the
ability of area workers to afford housing. This trend may continue as Dublin has the
potential to create 31,270 additional jobs between 2003 and 2025. According to Census
data for the Td-Valley area, a significant percentage of these jobs will be filled by
individuals living in very Iow-, Iow, and moderate-income households. It is these
households that will experience the greatest difficulties in finding affordable houSing in
Dublin.
The City of Dublin has established an Inclusionary Zoning Ordinance which requires
12.5 percent Of all residential units be made affordable to very low, Iow and moderate
income families and individuals, Nevertheless, a significant gap will remain between the
need and demand for affordable housing in Dublin and the number of affordable housing
units available to these residents. One' method of bridging that gap is to charge an
affordable housing impact fee to nonresidential developments. A justification for such a
fee is that nonresidential developments create employment that generates a need and
demand for affordable housing based on the anticipated income levels of the workforce
in those developments. Revenues from the Nonresidential Development Affordable
Housing Impact Fee would be used to build housing in Dublin that very Iow-, Iow-, and
moderate-income households can rent or own.
~ Total building floor area projections include areas within the Dublin Ranch development which have been
exempted from any potential nonresidential development impact fee.
7 Fee calculated per square foot of new commercial development floor area.
s Total floor area subject to the fee is reduced by the approximately 3.3 million square feet of commercial
floor area exempted by the Fairway Ranch develoPment agreement.
City of Dublin
Nonresidential Impact Fee
21
Final Report
The Tri-vailey Herald
c/o ANG Newspapers
4770 Willow Road, Pleasanton, CA 94588
Legal Advertising
(925) 416-4719
Legal No. 2154594
PROOF OF PUBLICATION
In the matter of
HEARING ON OCT. 2, 2001, RE: RESOL. OF
'INTENT TO ADOPT DEVi FEE TO MITIGATE
THE IMPACTS OF NONRESIDENTIAL DEV. OF
THE AFFORDABILITY OF HOUSING
The undersigned below, deposes and says that he/~he was the Public
Notice Advertising Clerk of the TRI-VALLEY HERALD a newspaper of
general circulation as defined by Government Code Section
6000 adjucated as such by the Supedor Court of the State of California,
County of Alameda (Order Nos. 205 370 and 240 625) which is
published and circulated in Murray and Pleasanton Townships in said
county and state seven days a week.
That the
PUBLIC NOTICE
of which the annexed is a printed copy, was published in every issue of
the TRI-VALLEY HERALD, on the following dates:
SEPTEMBER 22, 2001
I certify (or declare) under the penalty of perjury that the foregoing is true
and correct.